Important: Please note this article may be updated as more information is provided.
Last Update - 3:00 pm, 9 March 2022.
Last Update - 11:00am, 21 June 2023.
Last Update - 12:00pm, 23 August 2023.
Eligibility for the Leave Support Scheme ended on 15 August 2023, when the requirement to self-isolate due to COVID-19 ended. You can't apply for anyone who was in self-isolation after 15 August.
You can still apply if your employee (or you, if you're self-employed), started self-isolating before 13 August.
There's more information on Work and Income's website.
The information below is no longer relevant now the subsidies have ended.
This article covers the latest information we have about any current subsidies available to support employers and employees affected by COVID-19 which may impact on your payroll processing, and how you can handle them.
What subsidies are available?
There is a range of financial support available to businesses, which you can learn more about at business.govt.nz. The support which may be applicable to how you pay your employees in PayHero is:
Leave Support Scheme - a weekly set payment of $600 per week for full-time employees or $359 per week for part-time employees, for employees who are required to self-isolate for longer periods and can't work from home.
Please see the business.govt.nz website for official information and guidance regarding this subsidy here: Financial Support for Businesses
How do I pay my employees when I receive the Leave Support Scheme?
The Leave Support Scheme (LSS) is for employees who need to self-isolate for four days or more and can't work from home. Learn more about eligibility here. While receiving the LSS payment, employers should:
- endeavour to pay the employee their normal earnings, or at least 80 per cent of each their normal earnings; and
- pay at least the full amount of the LSS payment to the employee; but
- where the normal earnings of an employee named in your application is lawfully below the amount of the LSS payment, pay the employee that amount.
Payment of Normal Earnings or Subsidy Top Ups
If you are receiving the LSS payment and;
- Topping up payment to the employee's normal earnings, or
- Paying a reduced percentage of normal earnings (e.g. 80%), or
- If the wage subsidy is more than the employee's normal earnings
We recommend continuing to pay the employee as you normally would without detailing the LSS payment on the employee payslip. There is no requirement to detail the LSS payment on the payslip.
In this case, the earnings would be the employee's regular earnings e.g. Salary or Ordinary Time.
Alternatively, if you're wanting to pay employees normally but would like their absence to appear as an identifiable component of the employee's pay, we'd recommend creating a new Regular Earnings pay item by navigating to Manage > Pay Items > Earnings, clicking the green plus button, and selecting Regular Earnings. You can then name the pay item appropriately and include it in draft pays as needed.
Paying only the LSS Payment
If you are only paying your employees the LSS payment amount, you'll need to create a new 'Other Earnings' pay item with the following settings (if you have both full time and part-time employees, you'll need two pay items for each of the payment amounts):
You can then add this pay item to their draft pay and specify the quantity of weeks included in that pay:
What happens with Tax & Deductions?
Tax, KiwiSaver and Student Loan deductions should continue to be calculated and applied as they would usually.
How should I set the 'Work Days' for employees with no Work Pattern?
The Work Days specified for each employee in a pay should reflect the number of days the employee is being paid for in a week. In most cases, this will be the employee's normal days per week and no variation will occur.
In cases where an employee's normal days per week is variable, we suggest looking at the Holiday Leave Available pop-up from the employee's Leave tab to see how many days per week there are in the current review period as a guide.
If you choose to set the Days Worked to less than this amount, it will increase the employee's average daily rate, but will decrease the employee's annual leave balance of leave due in days. For this reason, we recommend setting the days worked to what would normally be worked by the employee.
What happens to my employee's Annual Leave?
Employees will continue to become entitled to Annual Leave whilst receiving the government wage subsidy. This means if they cross their employment anniversary, 4 weeks will be added to their Current Leave Due balance. For more details on Annual Leave in PayHero, please see: How Annual Leave and Holiday Pay Work.
If the employee has agreed to some form of paid leave with the employer, the scheme can be used to cover some or all of that cost. Employers must still meet all of their obligations under employment law in agreeing, and gaining agreement from the employee, to use that leave.
How do I determine an employee's normal earnings?
You may need to identify each employee's normal wage or salary when applying for the wage subsidy. While this may be obvious for salaried or very regular employees, there isn't a clear definition of exactly how to calculate 'normal income' for more variable employees.
The Leave Liability Report in PayHero is a quick and easy way to find averages for your employees. This report contains the following two rates:
- Average Weekly Rate - The employee's average weekly rate, calculated over the 52 weeks prior.
- Ordinary Weekly Rate - The employee's ordinary weekly rate, calculated over the 4 weeks prior.
In many cases, the Ordinary Weekly Rate is more likely to give an accurate representation of how much your employees are currently earning, rather than taking historical work patterns that may no longer be relevant into account. Alternatively, some employers like to use the higher of the two, which is what would happen when paying employees Annual Leave.
In either case, make sure you're following guidance from MBIE when choosing which figure to use. The 'Normal income' or 'normal wage or salary' section of this article from MBIE contains a lot of great tips for ensuring you follow best practices in determining this figure for your employees.